Standing Committee B

[Mr. Derek Conway in the Chair]

Enterprise Bill

Clause 11 - Super-complaints to the OFT

Amendment proposed [this day]: No. 23, in page 5, line 20, at end insert— 
'(6A) The status of ''designated consumer body'' for the purposes of this section shall be renewed by the Secretary of State on an annual basis and revoked if he thinks fit.'.—[Mr. Waterson.]
 Question again proposed, That the amendment be made.

Melanie Johnson: The amendment would make the Secretary of State renew the status of designated consumer bodies on an annual basis. We intend that it should be done only as necessary when we and/or the Office of Fair Trading are worried about a designated body.
 I appreciate the points made earlier by hon. Members but to make an annual review a legal requirement would place an unnecessary administrative burden on the Government and consumer bodies and be a bureaucratic addition to the Bill. As the hon. Member for Cities of London and Westminster (Mr. Field) remarked, it could lead to more complaints than necessary as bodies attempt to justify their status. The amendment is unnecessary; we have the powers to withdraw the designation when and if necessary. I hope that hon. Members, having debated the subject and thought about it further may wish to withdraw the amendment. If they do not do so, I shall ask the Committee to oppose it.

Nigel Waterson: I welcome you back to the Chair, Mr. Conway.
 If the Minister says that my amendment is unnecessary, who am I to argue? I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 11 ordered to stand part of the Bill.

Clause 196 - Super-complaints to regulators

Harry Barnes: I beg to move amendment No. 122, in page 142, line 41, at end insert—
'(1A) The Secretary of State may by order provide that section 11 is to apply to complaints made by a designated producer body in the same way as to complaints by a designated consumer body.
(1B) ''Designated producer body'' means a trade union or other body designated by the Secretary of State by order.'.
 The amendment arises from remarks that I made at the end of the second sitting, which were exceptionally 
 brief because I was not sure that I was in order and wanted to make my point quickly. The hon. Member for Eastbourne (Mr. Waterson) said that he was looking forward to my tabling an amendment on the subject, as that would make an interesting debate. He has encouraged me to table this amendment. 
 My concern is that we have discussed consumers and business—I solidly support the points made this morning in defence of consumers—but not the position of producers and workers in such circumstances. My question is, ''What about the workers?'' In the Committee's first sitting, the hon. Gentleman said that I was ''irredeemably old Labour''. In speaking to the amendment, I shall try to reveal that Labour, old and modern, has many strands. 
 At the high watermark of what was called Bennism in the Labour party, there was what we called the hard left and the soft left. I suspect that the hard left's belief in the workers would have made them favour my amendment rather than the provisions on consumer bodies that we agreed in clause 11. The soft left's commitment to the parliamentary, rather than the industrial, struggle would have led it to prefer clause 11 to my amendment, as the electorate are all consumers but are not all paid workers. There is a feeling in Parliament that consumers and the electorate are fully interlinked. My brand of old Labour has always represented a third socialist way; neither too hard nor too left. It should not be confused with any other third way, such as the new Labour one. In fact, my brand of democratic socialism is bang up to date and futuristic, as my support of clause 11 and the amendment reflects. 
 I recognise that the same person can have different, even conflicting, interests in different circumstances and places. They can be a consumer on the high street, a worker at the coal face—of which there are few left—an academic in an ivory tower or someone on the other side of the counter. Part 1 should reflect those interests in relation to designated bodies that can make complaints to the Office of Fair Trading. The OFT would then have the standard, democratic duty to try to reconcile conflicting interests. That is a valuable characteristic of a democratic society, as long as the process does not disadvantage people; that is what the provisions on consumers seek to correct. My amendment recognises that the workers by hand and by brain are not forgotten. They have not gone away, and we cannot function without them. 
 I mentioned G.D.H. Cole who produced books on guild socialism early in his career. He came to advocate a Parliament comprising a House of consumers and a House of producers. Everyone held the interests of consumers. The House of producers and the House of consumers would be similar bodies under a universal franchise that was still developing at that time. Consumers are now properly and fully represented in the House of Commons. Clause 11 would not have surprised him, as it is in keeping with his thinking and values. 
 His House of producers was to be a second Chamber and was based on his idea of guild socialism, an industry-based, democratic trade 
 unionism that covered all workers by hand or by brain in a sort of institutionalised TUC. He believed that consumers and producers would work in harmony with each other, especially as a socialist society was developed and established. He believed that the House of producers should have the final say in any clash of interests with the House of consumers. The House of producers was the nobler ideal, as producers affected the workers more and, in the end, we were all dependent on them.

Nigel Waterson: I am following the hon. Gentleman's argument with enormous interest, tinged with horror. Did he ever have a chance to discuss these interesting ideas with his late uncle, whom I once had the great pleasure of meeting in the bar of the British Legion club in my constituency? He was very proud of his young nephew and how well he was doing in politics.

Harry Barnes: I did not have a chance to discuss these ideas with my late uncle Arthur, but we certainly discussed the happy occasion when he met the hon. Gentleman.
 G.D.H. Cole would probably have wanted to add something to my amendment, because he would want to raise the status of the workers more than this mild measure does. It is a quite peculiar proposal, in fact, because of the time in which I tabled it. Although it would allow producers to have a say with the OFT, that would be on consumer issues. I did not think about that matter earlier; it only came out of our discussions. However, there might be an opportunity later to clarify the proposal further, perhaps in the form of a more appropriate new clause. 
 After his guild socialist period, G.D.H. Cole's views moved on. As he became more involved in the politics of Labourism, he edged much more towards the position of the electorate and therefore the consumer, even though he still had a great commitment to the trade unions. 
 That is just about the position in which my amendment would put us. It would not turn the Bill on its head and is not designed to do something contrary to the principles on which it is based. However, the amendment would introduce into the Bill an interest that is not currently considered by it and which is being pushed ever backwards in modern society. Altering legislation so that that interest receives more consideration is important. 
 I merely wish to improve the balance of the Bill without changing it into something diametrically different. In response to my short speech the other day, my hon. Friend the Under-Secretary said that it was hard to answer my point as she needed to give it more thought. Now that I have tabled an amendment, presumably she and her office have given it more thought. 
 I am talking about a mechanism whereby trade unions and representatives of people at work in all forms and different grades can be involved in the consideration of market operations. The provision could provide for another set of people who could be consulted on consumer matters, or there could be a 
 mechanism whereby their more direct interests as producers could function without distorting terribly the operation of the market, while offering some safeguards for their position. The position of the consumer may sometimes be like that of David against Goliath, as was said this morning, but workers are sometimes in exactly the same position. 
 I may be told that this is the wrong Bill through which to deal with these matters, but we shall come later to the merger provisions, in which the work force has a clear interest; these may be subject to discussion.

Ken Purchase: Lovely territory. Would not it have been an elegant coincidence if, instead of clause 196, we had been debating clause 4? My hon. Friend the Member for North-East Derbyshire (Mr. Barnes) calls upon an excellent tradition to make his case. I understand his point that perhaps later in the Bill, when we look at the question of mergers and monopolies in markets, we should revisit his words. He calls upon a tradition that is embodied in the notion and ethics of co-operation, of the Co-operative movement and of Robert Owen, seeing that the interests of consumers and producers were one and the same in a just and equitable society.
 Regrettably, we do not live in just and equitable society. The nature of the competitive ethos with which we struggle is inimical to the idea of co-operation. It is a pity, but we must work with the tools and in the society that we have. We have to begin from where we are, rather than where we would wish to be. I am grateful to my hon. Friend for tabling the amendment. When we look at the organisations such as the Consumers Association—and when we praise the wonderful work that the late Lord Young, who started it all those years ago, did on behalf of consumers—we should remember that their ethos should thread its way through this Bill. In the society that I would like to build, there would be a coming together of the interests of consumers and producers; whether those producers work by hand or brain, as my hon. Friend would define it, or as part of a company as owners and shareholders. They are not opposed. 
 The idea that we should produce ethically, properly and within rules that are not unfair to any other producers, and that goods and services are produced to the highest standards at the most reasonable costs, threads through the whole of the Labour party. The Labour party that I inhabit has never opposed enterprise. It has always recognised that, to succeed, the economy must be a mixed grill of regulation, competition and organisations that act on behalf of employers and workers. In that sense the strengthening of our trade unions through recent legislation by this Government has been helpful. 
 Opposition Members will take a contrary view; they are entitled to do so. I stand firm and say that in the society that we inhabit and in terms of the economic ethos with which we work, a strong trade union movement, a strong consumer movement and strong producers and employers suit us best. I am grateful to my hon. Friend the Member for North-East Derbyshire for tabling the amendment to provoke 
 those thoughts. I sincerely hope that his words will be taken into account again when we come to the part of the Bill that deals with mergers, monopolies and anti-competitive measures.

Alistair Carmichael: I echo the closing words of the hon. Member for Wolverhampton, North-East (Mr. Purchase) about the thoughtfulness of the presentation from the hon. Member for North-East Derbyshire and, indeed, the thought-provoking nature of his amendment. I do not share much of the horror felt by the hon. Member for Eastbourne. In tabling the amendment the hon. Gentleman has raised important issues that I hope the Under-Secretary will consider at a later stage. There are interests, such as those represented by trade unions. Perhaps other bodies, such as professional bodies—one thinks of the role of the Law Society in the financial services sector—would have a legitimate interest and could be a designated producer body as well. The role of such bodies is important and deserves careful consideration.
 The amendment may not be accepted today, as I see differing expressions on the faces of Labour Members. Following the chasm between the hon. Members for Eastbourne and for Cities of London and Westminster this morning, I think that, with splits, the Liberal Democrats lead where other parties will eventually follow. However, there are serious points. The hon. Member for North-East Derbyshire should be commended for introducing them, but I would not go quite as far as he would. If push came to shove, I would not support the amendment, but I hope that the important issues that he raised will be considered.

John Pugh: I share the sentiments of my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael). It was a lovely and educational excursion from the hon. Member for North-East Derbyshire, and I enjoyed every minute of it, especially the references to uncle Arthur. However, I then read clause 11(1), which the amendment would modify. It says that the proposal applies when a designated consumer body complains because something
''appears to be significantly the interests of the consumers.''
 The hon. Gentleman can correct me if I am wrong, but that seems to suggest that the producers should interfere on behalf of consumers. It seems formally inappropriate.

Harry Barnes: I tried to explain that there was a problem, which arises because we had already discussed clause 11(1) before I tabled my amendment. Ideally, I should have moved earlier so that I could have had a different form of wording. Unfortunately the amendment suffers from the difficulty of producers making references on behalf of consumers.

John Pugh: That point is accepted, and it creates a difficulty in supporting the amendment. However, the hon. Gentleman has alerted us to a missing dimension in the Bill. We will be receptive to arguments about it later in our consideration, but as it stands, the amendment is formally inappropriate and cannot be supported.

Melanie Johnson: May I also say how much I have enjoyed this debate and how refreshing it is to have an injection of history and thinking into our consideration? I share the regret of my hon. Friend the Member for Wolverhampton, North-East that we did not reach this point at clause 4. It would have been a nice touch.
 It is important to remember that the policy's focus is to alert the OFT to market failures that significantly harm the interests of consumers, which relates to the point that was made during the exchange between my hon. Friend the Member for North-East Derbyshire and the hon. Member for Southport (Dr. Pugh). Individual consumers do not necessarily have access to the information, skills, resources and expertise required to put together cogent complaints about the failure of particular markets. That is why we want to enable consumer bodies to do that on their behalf and formalise the process so that consumer interests are protected. That is why the Bill does not envisage that the procedure will be available other than to those who are designated as consumer bodies. 
 One point that was raised in many contributions, but particularly by my hon. Friend the Member for Wolverhampton, North-East, was the identification that the interests of consumers and producers are one and the same. I support that point, and one of the thrusts that underlies the Bill is that these things must be brought together for consumers and business to get a fair deal. There are differences in this matter, and consumer bodies will be best equipped to represent the interests of consumers. 
 My hon. Friend the Member for North-East Derbyshire commented on producer interests throughout his speech. On trade union involvement, I reassure him that the TUC was fully involved in all the discussions leading to the drafting of the Bill, through the White Paper consultations and the ongoing discussions with officials in the Department of Trade and Industry. Similarly, discussions have taken place with business groups and other interest groups. 
 As I am sure my hon. Friend would agree, producer interests cover not only trade unions but business groups. Neither trade unions nor business interests have as their raison d'etre the protection of consumer interests. They may consider consumer interests but those are not their primary concern, which is why we do not propose to designate those groups under the super complaints procedure. However, I reassure my hon. Friend, and all hon. Members who have contributed, that producer bodies can already put complaints about market failure and other issues to the office of OFT and they will still be able to do so. Although they will not have super complaints status, they will be able to make the sort of representations that I know my hon. Friend would want.

John Pugh: Will the Under-Secretary give way?

Melanie Johnson: I would rather finish my speech.
 I hope that my hon. Friend can recognise that his interests are sufficiently embodied in the Bill and withdraw his amendment.

Harry Barnes: The amendment has flaws, to which I have already pointed—although it was a useful trailer for other matters—and I am not the variety of hard left politician who would push it beyond a position that it can carry.

John Pugh: I thank the hon. Gentleman for giving way; he allows me to make the point that I wished to make to the Under-Secretary. She has not adequately clarified why super complaints status is not given to producer interests. These would make a different type of complaint from those made by consumer interests, but one no less lacking in status.

Harry Barnes: Yes, the amendment contains serious points. The concern about producers could be included in legislation. However, I was saying why I will withdraw the amendment. I am not of the hard left position that cracks by wanting to stand pure all the time, nor am I soft left. In this malleable position, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 196 ordered to stand part of the Bill.

Clause 16 - Damages

Jonathan Djanogly: I beg to move amendment No. 31, in page 8, line 3, at end insert—
'(3A) The Tribunal shall also have the power to grant injunctive relief.'.
 I would be interested to know why we are not dealing with clause 15 first, because in some ways it draws into clause 16. I appreciate that the Government want to open up the enforcement of competition law and encourage private actions—we will come to those issues when we discuss clause 15—but the order in which we are considering matters still seems unusual. 
 The Competition Act 1988 already provides for the right to seek damages in the courts, and clause 16 will provide the extra teeth to competition appeals tribunals, which will also be able to hear damages claims. 
 Different types of relief—damages and injunctive relief—are available to claimants. The claimant will often be concerned not only to receive compensation in the form of damages for what has happened, but to apply to the court for injunctive relief to prevent it happening again. Insofar as that is relevant to the court process, it is also relevant to the CAT process. If not, the claimant could not achieve both objects through the same legal process. A claimant pursuing damages through the CAT would need a simultaneous court action in process to obtain injunctive relief. That would lead to a costlier and lazier process being heard by two courts that could take different tacks on the same issue. 
 To the extent that the amendment would simplify the process, I fully support it. However, wider issues are relevant. The Government have changed their mind. The issue was debated during the passage of the 1998 Act and it was decided then that damages should 
 not fall within the CAT process. Will the Minister explain the Government's changing thought processes? I note that a Library research paper refers to consultations prior to the 1998 Act and sets out the Government's view then: 
''We have considered carefully the option of making the Competition Commission, as opposed to the Courts, the forum to hear private law actions for breach of the prohibition such as claims by third parties for damages or interim relief. We have concluded that there are significant drawbacks to such private actions being heard in the tribunal. In practice the application of the prohibition would often be one of many areas of the commercial dispute to resolve which, in turn, could lead to an unnecessary duplication of fact finding as the tribunal heard competition law points and the courts heard other aspects of the same case. Moreover, if the tribunal were to hear such private law actions, this could prejudice its primary objective of providing a quick and efficient review of DGFT decisions. We have therefore decided that such private actions should be heard in the courts.''
 We are now dealing with the damages side, so we are diverging from that position only a few years later by placing it into a CAT process, while it has been decided that the injunctive relief element will not be moved into that process. That will complicate rather than simplify matters. Will the Government explain their view? 
 The concept of injunctive relief is part of the wider debate on the role of the CAT. Competition issues should generally be dealt with by the CAT rather than by a mix of the CAT and the courts. The Government have been lobbied generally and several judges have argued that the CAT should have a wider role than under the Bill. It is in the interests of business that a specialised tribunal, which will act more quickly than the courts, deals with competition. Increasing the ability of the courts to take speedy decisions, making the process more uniform and avoiding duplication should lead the Government to review the amendment carefully.

Alistair Carmichael: I rise to endorse the words of the hon. Member for Huntingdon (Mr. Djanogly). The tribunal has a quasi-judicial function, so it is only sensible that the full range of civil avenues should be open for exploration. If an injunction were granted at an early stage but later found to be wrongful diligence, might not the damages be horrific? I presume that an injunction would be used sparingly in England. My only other observation relates to the drafting of the amendment. Subsection (2) refers to
''a claim in tort or, in Scotland, delict'',
 so it would be similarly sensitive to acknowledge in the amendment that Scotland does not use the term ''injunction'', but ''interdict''. My amendment to the amendment would make it absolutely correct and more elegant.

Melanie Johnson: First, clauses 16 and 17 are concerned with damages claims, so they can be grouped coherently together. Clause 15, however, belongs more appropriately with part 2, which we have not yet reached. If the hon. Member for Huntingdon reflected further on that, he would understand that that is the simple reason behind the current focus on clause 16.
 The amendment would give the Competition Appeal Tribunal the power to grant injunctive 
 relief—the power to make directions in the context of damages claims made before it. Such a power is unnecessary. When a damages claim is made before the tribunal, the issue of whether an infringement of competition law has taken place will already have been decided either by the OFT or the tribunal itself on appeal from the OFT. In taking decisions on infringements of competition law, the OFT or the tribunal will have full powers to grant injunctive relief in the form of directions. Additionally, the OFT will have the power to grant interim relief while it is still investigating a possible infringement and the tribunal to grant interim relief while it is still hearing an appeal. 
 If an appeal were made against a decision of the OFT that an agreement does not infringe the chapter 1 prohibition, the tribunal could make an interim order preventing the parties to the agreement from implementing it. If it is upheld, the CAT could make a final direction requiring the parties to modify or terminate the agreement. All such issues will have been decided before a damages claim is made, so any appropriate injunctions will already be in place. The power is not needed at the stage when the tribunal is hearing or deciding on a claim for damages. In a damages case, the only powers that the CAT needs are the power to award the damages and the power to award costs. On no occasion would an extension of the injunctive powers of the CAT to cover damages cases be required. Therefore, I invite the hon. Gentleman to withdraw the amendment and ask the Committee to support me in opposing it.

Jonathan Djanogly: I thank the Under-Secretary for her comprehensive response. Ultimately, the concept of damages is acceptable—certainly more than that of super complaints—if only because here we are talking about a defined set of circumstances rather than heading off into the unknown. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nigel Waterson: I beg to move amendment No. 55, in page 8, line 25, at end insert—
'(5A) The limitation period for bringing claims pursuant to this section shall be six months from the date on which the cause of action arose.'.
 The amendment is another attempt to limit the effect of the clause, by including a new subsection, (5A), which proposes a limitation period. Clause 16 amends the Competition Act 1998 to allow the tribunal to hear damages claims, but cases can be brought to the tribunal only after a finding by the United Kingdom or European authorities of an infringement of either the UK prohibitions or those in the European treaty. As I shall outline in more detail in our debate on clause 17, if there is a claim for damages in tort—in delict in Scotland—the tribunal will not be able to hear damages claims until any possible appeal has been heard. 
 The clause also makes it clear that findings of an infringement by the OFT and the tribunal are to be binding on all courts. I hope that the Minister will clarify matters in her reply, which will obviate the need for a stand part debate. I want to know what the position is likely to be. Can the Minister confirm that 
 these are quasi-judicial hearings? Will people be permitted, or have the right to, legal representation? 
 It would be reasonable to introduce the six-month period in the amendment to avoid companies being put in excessive jeopardy. It is not an excessively short time. The limitation period for industrial tribunals, for example, is only three months. In any event, as a backstop, as clause 16(6) shows, general civil claims are not affected by the proposal, so if the proposed limitation period expires, civil proceedings may still be brought by injured parties. I stress that the six months would start to run only from the time that the cause of action arises, which will be clearly definable in terms of the infringements to which I referred. I urge the Committee to support the amendment.

Jonathan Djanogly: The possible consequences for a company of a claim being made under clause 16 could be severe, so I support the concept of a time period. The CAT will be a new organisation. I am not sure how it would work without amendment and I should be grateful if the Minister would advise the Committee whether existing general laws of limitation will apply to claims. I should have thought not, as there will be a tribunal rather than a court process, therefore it is particularly important that there should be a cap on the time period. Clause 17, which we shall discuss later, will empower consumers to make claims. I have visions of an American-type situation in which law firms advertise for claimants and trail around the country trying to get as many people as they can to join the action, which will go on for months or even years as a result. That would be damaging to the company and to the legal process. For that reason, it is important to get the measure right.
 By tradition, time scales in tribunal processes are generally shorter than in court cases. We do not want to detract from what is in the best interests of the taxpayer. I therefore suggest that the six-month period is appropriate.

Melanie Johnson: The Bill enables the period within which claims can be brought to be stipulated in the tribunal rules that are made by the Secretary of State. We are considering what we should align to that period. Under section 2 of the Limitation Act 1980, the period for the courts is six years. There seems to be no reason why the option of pursuing a claim through the tribunal should be available for a shorter time than is available for making an equivalent claim through the courts. Our aim is to facilitate, rather than to discourage, the bringing of claims before the tribunal. Claims can be brought only when the full process has been gone through and when an appeal, if relevant, has been heard.

Jonathan Djanogly: I disagree. There is a tradition in this country of differing periods between court and tribunal processes, which is one reason for tribunals. Employment comes to mind. An employee may have a contractual right to sue for six years, but may have to go to a tribunal within three months.

Melanie Johnson: The tribunal is a fully judicial body and legal representation is as available in a tribunal as it is in a court.

Nigel Waterson: Before the Under-Secretary finishes discussing that matter, would it not be unusual for any tribunal to have the power to specify its own limitation period? She, or even the Secretary of State, is right that under the Limitation Act 1980 there is a limit of six years on ordinary and other contractual claims. However, there is a panoply of different time limits in English law. My hon. Friend the Member for Huntingdon mentioned personal injury in employment tribunals, for which the limit is three years. For some bizarre reason, it is two years for collision cases in Admiralty law and there is a range of other cases. Is it right for the period to be established by regulation rather than mainstream law?

Melanie Johnson: The hon. Gentleman is making a point not only about whether the time limit should be in the Bill, but about it being six months. Six months is a short amount of time for many cases. Issues relating to damages, for example, can be complex.

Alistair Carmichael: I remind the Under-Secretary of the restricted scope of subsection (5), which relates to cases where paragraphs (d) and (e) apply. Almost everything that is to be discovered about such cases will have been discovered long before any such period starts. There is a need for time limits, or prescription periods, in the Bill. That was always agreed and it is an undesirable departure to prescribe time limits by rules of court.

Melanie Johnson: I have listened carefully to the arguments of Opposition Members, but six months is too short a timeframe. It would be unfortunate if the Bill specified a time limit of six months and I urge the hon. Gentlemen to withdraw the amendment. We are considering the time limit and I will return to it later in the debate.

Nigel Waterson: The Under-Secretary kindly said that she does not have a closed mind on the subject and will reconsider it. That is entirely appropriate, as she has divined that there is a strong groundswell of belief that the issue should be reconsidered. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 16 ordered to stand part of the Bill.

Clause 17 - Claims on behalf of consumers

Nigel Waterson: I beg to move amendment No. 70, page 8, line 33, after 'specified', insert 'consumer'.
 We have been pretty good so far at avoiding unnecessary stand part debates and I am sure that we will continue to do so, as they can be repetitive and tedious, in stark contrast to the debates on the amendments. With your leave, Mr. Conway, I intend to deal narrowly with the amendments in the hope that fortune might shine on me and you might allow a stand part debate on clause 17. I thought that I should say that now. 
 The amendment is straightforward. It would simply insert the word ''consumer'', so that the provision would relate to a ''specified consumer body''. It is in the spirit of both the clause and legislation to make that clear and I cannot see why it would be 
 objectionable. I will be surprised if the Under-Secretary does not accept it with enthusiasm.

Melanie Johnson: As the hon. Gentleman said, the amendment would ensure that only consumer bodies could bring consumer group claims. He invited me to accept it, but it would add little to the clause. Organisations that wanted to bring consumer group claims would have to apply to be designated by the Secretary of State specifically for the purpose, as we have discussed. Applicants would then have to meet the published criteria if they were to be included in the list of specified bodies. As we discussed, the criteria will be subject to consultation, but they will include a requirement for organisations to demonstrate that they represent the interests of consumers. As the amendment would not add anything, I do not feel sufficiently moved to accept it. I hope that the hon. Gentleman will take that in the spirit in which it is said.

Nigel Waterson: It is thoroughly demoralising to hear that one of my amendments is unsatisfactory or unnecessary, but I understand the Under-Secretary's comments. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nigel Waterson: I beg to move amendment No. 57, in page 8, line 34, leave out 'two' and insert 'fifty'.

Derek Conway: With this it will be convenient to consider amendment No. 58, in page 8, line 41, after 'may', insert 'only'.

Nigel Waterson: I am sure that hon. Members will characterise the amendments as another attempt to emasculate the legislation, but they are nothing of the sort. They represent a desire to be clear about how it will work in the real world, which includes business and industry as well as consumer bodies and politicians, whether some hon. Members like it or not.

Melanie Johnson: Can we be clear that we do like the world like that?

Nigel Waterson: I am sure that we can be clear. I am clear about that, as I am sure that you are, Mr. Conway, but as someone once said, ''By their deeds shall they be known''.
 For some puzzling reason—one can imagine the poor draftsman late at night stretching his legs and coming up with this whimsical piece of drafting—new section 47B(1) says that a claim may be made 
''on behalf of two or more individuals''.
 I am puzzled why one would want to specify ''two or more'' on the basis that one complaint should be enough. If a consumer stumbled across a massive abuse or infringement, surely that would be enough on the general whistleblower principle. However, the Government believe that it should be two or more. I do not know whether there is a danger that the one person might simply be bonkers. 
 I intend to discuss this at as much length as you will permit me on the stand part debate, Mr. Conway, as we are into brand new territory in English and, I dare say, Scots law. It needs careful attention, otherwise a law with unintended consequences will really kick in 
 with a vengeance. The CBI, among others, was concerned about the phrase and came up with a proposed amendment, which I was happy to adopt. Given that for some reason the Government want to specify a number of individuals, it proposed that we should make it 50 or more. The basis for that proposal is the far-reaching nature and complete novelty of the power, as well as an attempt to be sure that whatever body brings an action represents a significant section of consumers. 
 In a sense, we are back to the danger of frivolous and vexatious claims and we could re-run that whole debate, but I suspect that we would have the same result. I should be fascinated to hear a ministerial justification for the provision referring to ''two or more'' individuals. I believe that there is merit in the suggestion that if we are to specify a number, it should be a significant number. 
 The Under-Secretary may reply that that would be the position anyway and that only pretty big league matters would be taken forward under the procedure, which almost by definition would mean large numbers of consumers were affected. I simply do not know, but if we are to specify a number, we could easily incorporate another safeguard by specifying a minimum of 50. I am not dogmatic about the number, but there should be some recognition that a not insignificant number of consumers must be affected. That is the basis of amendment No. 57. 
 Amendment No. 58 would provide an important safeguard in relation to this far-reaching power. Without it, there is a risk that the consumer body would retain the damages. Before anyone accuses me of facing both ways, I should point out that we shall come later to amendments that consider the possibility of a consumer body using funds obtained in that way for other purposes. If we are to go down that route, let us go down it with our eyes open. It is important to have this modest safeguard and I should be grateful to hear the Under-Secretary's comments.

Vincent Cable: As the hon. Gentleman has suggested, the clause raises some big issues. I imagine that the substance of them will be discussed when we reach the stand part debate. I am talking about the philosophy of whether consumer associations should be allowed to have real advocacy powers, followed up by possible legal action. However, we are dealing first with the safeguards, rather than the principle.
 When we dealt with many earlier clauses, I sympathised with the way in which the Conservative spokesman was approaching the Bill, but we rather part company in this area. As we shall reach the bigger issues in the stand part debate, I will now deal with the two points that he made. 
 The first issue is cost recovery and damages. The hon. Gentleman envisages the possible emergence of an American-style, ambulance-chasing culture. Theoretically, that could happen, but surely it depends substantially on which organisations are authorised under the legislation to use the powers. Consumer organisations in this country are not into that sort of game at present; it is not their business. 
 A few years ago, the Consumers Association took an important action, which I think was essentially a class action, to establish an issue of principle in relation to orphan assets in the insurance industry. It was a big case, involving big costs, and not unreasonably the association would have expected to recover its costs, although not to profit from the process. Again, I am not sure whether the hon. Gentleman is concerned about consumer organisations ensuring that they have full cost recovery or whether they seek to make a profit. 
 The front-line consumer organisations of which I am thinking—the Consumers Association, the National Association of Citizens Advice Bureaux, and local citizens advice bureaux—are not ambulance chasers. That is not their mission and it is not why they would be authorised to take on the function that we are discussing. They do not operate in that way. We need to face the issue of how, presumably under secondary legislation, those organisations would be defined to prevent the opportunism that the hon. Gentleman described. I am not sure whether it is necessary to enshrine it in quite that way. 
 The second issue that the hon. Gentleman raised was multiple cases. I listened to his argument and he made the right point early on. Even one well-developed argument by one consumer should be enough to trigger an action. However, he then proceeded to argue that 50 cases should be needed. Even apart from the logic of that, I can foresee all kinds of difficulties with insisting on 50 cases, particularly in regard to a relatively local and minor issue that may be taken up by local CAB.

Alistair Carmichael: I bring to my hon. Friend's attention the example of the residents of Papa Stour in my constituency. As there are only 17 of them, if they were disadvantaged in some way—although they are of course blessed in every imaginable way and I commend the island to the hon. Member for Twickenham—and sought to bring a class action, as the Conservatives call it, they would not be able to do so.

Vincent Cable: As the hon. Member knows, I shall visit the residents of Papa Stour in a few weeks' time, so I shall be able to test that proposition at first hand. He makes the point precisely. Most actions that consumer bodies might take up involve fairly localised uses. We should consider the matter in common-sense terms.
 As Members of Parliament, we often act as consumer advocates. We do not have legal powers but we have powers to name and shame and to go to the local newspaper. That is often quite effective. When I hear of abuses, I ask myself whether it is an odd case or an example of systematic abuse. At what point does one pass that threshold? It happens when one has two or three identical cases. 
 An example is a case involving energy liberalisation that was brought to my attention at my surgery last Friday. I have to deal with many cases involving companies taking over electricity and gas supply on a questionable basis. A lady came to see me because a competitor company had taken over her supply. She 
 had been asked whether she wanted it and had said no, but the company had given her the gas none the less. When she got the bill and protested, saying that she did not want the gas and had not ordered it, the company apologised profusely but said that the deadline for cancelling the order had been passed. She said that she had spent the previous two months trying to ring its offices but the phone was always off the hook and no one answered; the company said that the law was the law and that she had to pay because she had not cancelled within the two-month period. I thought that that was perhaps just bad luck—such things happen—but I then had two identical cases involving the same company in the same area. One does not need to be a statistical genius to see statistical significance in that trend and perhaps the basis for a case.

Nigel Waterson: Maybe we should form our own little interest group on that issue. I have had similar cases in my constituency. I have finally got to the root of the problem: people who are going around trying to peddle the change are working on an incentive basis. There have been cases of requests being falsified.

Vincent Cable: The hon. Gentleman provides a common-sense explanation. The abuse that I am describing may not qualify for action under the powers, but I am pointing out that a small sample can provide the consumer associations with the evidence that they need to establish that abuse is taking place.

Ken Purchase: One of the big scandals is what the City likes to call insurance mis-selling; I thought that it was fraud. The surgery case that the hon. Gentleman described—I, and probably all hon. Members, have had to deal with similar cases in my surgery—is not mis-selling, but fraud. The law can and should deal with fraud, including insurance scams.

Vincent Cable: Indeed, I think the same way, but there have been massive mis-selling scandals—

Ken Purchase: Fraud, it is called.

Vincent Cable: Whether fraudulent or not, there have been many cases of sales of pensions and endowments where people were operating on such a scale that the Government could intervene on behalf of the consumer. Many of the cases with which we are dealing are small-scale, involving a local or regional company, and can be taken up by a specialised advocacy consumer group. The legislation should provide sufficient flexibility to allow that.

Melanie Johnson: First, it is important for hon. Members to recognise and bear in mind that all these provisions relate to named individuals. Those are the terms in which they are put. Consumer group claims about named individuals are an important part of the strategy to encourage harmed parties to claim redress when damaged by anti-competitive activity. Group claims make it more affordable for the average consumer to gain redress in those cases where a breach of competition laws has already been established. That is another point to bear in mind.
 Raising the number required to participate in a group claim merely puts barriers in the way of consumers who are legitimately trying to gain recompense for damage incurred as a result of activities that have already been found to breach the competition law. Some hon. Members have illustrated aspects of that point. Indeed, I am getting a little concerned that I may get a load of additional casework from members of the Committee as we share information around this afternoon. 
 In addition to the useful points that hon. Members have made about some of the scams and problems that they have identified, there is the point that for various reasons some individuals who will have been affected by something may not want to be part of a named action of this kind. There might be sensitive issues where people felt embarrassed to be named in this way. The numbers will not necessarily relate to the numbers of individuals affected. I guess that the draftsman picked two because it was the minimum needed to establish that it was group rather than an individual. To set a number would be artificially to pick a figure and could hinder actions.

Mark Field: I appreciate that any number will be arbitrary, but in various areas of life, be it nomination papers for parliamentary or council elections or petitions to go to local councils, a certain number is often needed. To have simply two for such an important class action seems rather low. I accept that even if one had a dozen or 50 names there would be the risk—although surely a lesser risk—of a vexatious claim by a small group of people who just wished to cause difficulties and managed to get a specified consumer body on side to promote their claim. Two seems far too low a number.

Melanie Johnson: Again, I remind hon. Members that the issue of damages arises only in cases that have already gone through the process and have come to a conclusion or have gone through an appeal and survived. Groups cannot bring things forward. The CAT will have the power to throw out claims with no reasonable grounds or that appear vexatious, but such claims would be as unlikely as vexatious super complaints. There will be a similar process of designation by criteria, on which we will consult, to designate groups to make damages claims under the clause. Again, organisations will be considered carefully before they are given that status. When they have that status there will be a huge obligation on them to act sensibly. At the end of the day, the tribunal itself has powers to throw out claims. It is superfluous to put a lower limit on the number that is needed for a claim because we could unwittingly rule out a particularly valuable claim that was being brought on behalf of, for example, 45 named individuals. That would seem very unfortunate.

Vincent Cable: Is it not the case that not only is there protection against vexatious claims by consumer organisations, but they have no incentive to make them? If the citizens advice bureaux were to use their scarce legal and manpower resources to pursue frivolous cases, they would inflict considerable costs on themselves. As CABs are cost-constrained bodies constantly seeking money from local councils, why
 would they fritter away their resources on vexatious cases?

Melanie Johnson: I entirely agree with the hon. Gentleman. It goes to the heart of the matter that such a case will already have been proven on behalf of consumers when there has been a problem with the market; it will have gone through the process. Under the conditions I have stated, an additional claim for damages would be highly unlikely to be other than a serious claim, with a strong chance of succeeding, for the reasons that the hon. Gentleman gave. I therefore urge the Committee to resist the amendment.

Nigel Waterson: I will not resist the Minister's urging. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Melanie Johnson: I do not have a great deal to add, but I appreciate that hon. Members want a further debate. I shall therefore outline our view of the clause.
 The clause was drafted to give consumer groups the opportunity to bring forward the sort of complaints that they might want to make. 
 The group representative claims can only be made before the CAT and, as in the case of other damages, claims brought before the CAT will be possible only when a breach of competition law has already been established. When the full appeals process relating to the relevant decision has been exhausted, organisations will be able to bring the claim, provided that the consumers concerned have given their consent. 
 Organisations will have to apply specifically for designation; there will be criteria, and a list of specified bodies will be contained in a statutory instrument made by the Secretary of State and subject to the negative resolution procedures of the House. Consumer group claims will make it more affordable for the average consumer to gain redress. Those harmed by anti-competitive activity will be often harmed to an extent that, although significant for the individual, would be difficult for people to take on themselves and would not necessarily justify the cost of a damages claim. In future, such consumers will be able to group together to claim the compensation that is rightfully theirs.

Nigel Waterson: The clause cries out for a stand part debate, for reasons that I have already mentioned. It is a massive departure for the English legal system.
 I said on Second Reading that the Bill had the Chancellor's fingerprints all over it and the clause is a good example. He seems to have acquired from his young days a superficial love of many things American, without fully understanding that what makes the American economy work is that people like him do not interfere in it too much. If we are not careful, we will be in ''Erin Brockovich'' territory. It is a very good film.

Ken Purchase: Excellent.

Nigel Waterson: Yes. However, the systems are quite different. There is a superficial similarity in the
 common law system and the legal language but that is where the similarities end. Things are very different in America if one is seeking redress. There is no concept of legal aid as we know it, although the situation is rapidly being harmonised by our Government. In the most unlikely cases, juries take decisions not just on liability, but on the quantum of damages and come up with some astronomical figures. In the United States, there is the highly developed system of the contingency fee, which, I regret, we have begun to import. Lawyers often take a high percentage of the damages ultimately recovered. People have access, whether in consumer or other sectors, to different mechanisms for justice.
 The Library brief on the clause is particularly helpful. It recalls the Competition White Paper in which the Government were in favour of representative claims 
''in cases where although there might be a large number of affected consumers each would have only a fairly small individual loss.''
 The original thinking was that consumers had a right to some sort of claim, but because their individual loss was relatively small, they had no real incentive to pursue it. Hence the idea in the White Paper of banding together and allowing representative organisations such as the NCC or the sectoral consumer panels in the utilities to bring cases on behalf of consumers. 
 A potential problem in the application of damages was, however, recognised. As the Library brief says: 
''The White Paper suggested either holding an award in trust and allowing claimants to make an application to the trust for their share, or using the award to benefit the affected class of claimant indirectly by using it for purposes which benefit consumers in that market (such as consumer information or community facilities).''
 It is a benign version of the contingency system whereby the matter is pursued on behalf of consumers and the moneys obtained by way of damages are used on behalf of consumers, but not just the group involved in the particular case. To use a wonderful civil service term in the briefing, ''mixed responses'' were made to these suggestions, and 
''the Government decided that representative claims can only be brought on behalf of named (as distinct to identifiable) consumers''.
 Hence we have the clause, the references to ''two or more individuals'' and so forth. The idea is that designated bodies bring claims on individuals' behalf, but not through the ordinary court system—that possibility is excluded, though the Under-Secretary will correct me if I am wrong—and only on behalf of consumers against businesses. 
 Understandably—it is a relatively novel area—the provision has provoked some worries among the business community, particularly the CBI. I quote from its parliamentary brief: 
''In our view, allowing consumer groups the right to bring actions for damages is one of the most ill-conceived and potentially damaging proposals in the entire Bill. Overall, the precedent of class actions in the USA is a very disturbing one and should be avoided here at all costs. The task of consumer organisations should be to bring suspected anti-competitive practices to the attention of the OFT, not to bring proceedings themselves, which would effectively turn such bodies into prosecuting authorities.''
 That strong language from the prime business organisation in the country deserves the attention of the Committee, even if hon. Members believe that the CBI is overstating the potential problem. I referred to class actions in the USA and I recall a good film called ''Class Action'' in which Gene Hackman starred as the lawyer and an action was brought by many people affected by a dangerously malfunctioning vehicle. Class actions occur in this country, but nothing like on the scale in the USA. 
 The legal professions should focus more on the massive implications of that change in English law. For all I know, there may be a similar procedure in Scots law. If such a procedure exists in the civil system, we need to know how, and if, it works. 
 The CBI continues: 
''allowing such actions would give consumer bodies huge powers without any countervailing obligations, and could provide a huge incentive on them to pursue disruptive litigation regardless of the merits of their particular case.''
 I take the view that has been expressed by other hon. Members including, most recently, the hon. Member for Twickenham (Dr. Cable), that the bodies that the Secretary of State is most likely to designate would not pursue unmeritorious claims, or pursue claims irresponsibly. However, that concern is exercising business and industry. 
 The CBI also expresses concern about identifying which organisations will be able to perform such an important role, although it is possible that it will become one of the rarely used powers on the statute book. I sometimes think that much of what we discuss in Committee ends up in that limbo. Equally, a whole range of consumer organisations may grasp it with enthusiasm. 
 The CBI is also concerned about damages, which I will briefly discuss without getting into too complex a legal discussion. Clauses 16 and 17 relate to damages, but it is easier to deal with the matter in one fell swoop. Clause 16 makes it clear that: 
''the same principles would be applied by a court in awarding damages in tort'',
 or delict in Scotland, which I assume is similar. 
 How does the Under-Secretary envisage the damages being calculated? Perhaps she can write to me if she does not have all the facts at her fingertips. Damages are a discrete claim, and one can draw analogies from the tort of interfering with business relations, which tends to be based on loss of business profits. There are often difficulties in English law in arriving at what is recoverable and what is not, as the loss is generally consequential. That may be a useful analogy. 
 As I said, that sort of loss is often inferred in the tort of inducement of mutual contract, according to MacGregor on damages, which is the lawyers' bible on the subject. Cases such as Exchange Telegraph Co. v. Gregory and Co. in 1896, Goldsoll v. Goldman in 1914, and Brents Brewery Co. v. Luke Hogan in 1945 established the broad basis on which damages are arrived at, and which damages are recoverable. My 
 days as a law student remind me that there are all sorts of issues in tort about foreseeability and remoteness; concepts about which lawyers are apt to argue when they are students or in the House of Lords. 
 It would be useful to me and, I hope, to the Committee if the Under-Secretary gave us some idea of how the calculation of damages would be approached in such cases. That might also reassure the CBI and those whom they represent, not least because it will be difficult to make the direct link between a large group of consumers, on whose behalf an action is being taken, and the losses to be claimed from and paid by the relevant company or organisation. I do not want to rain on the Under-Secretary's parade, because this is a big step forward from the consumers' point of view. I will quote the Consumers Association briefing for our Second Reading debate, which said: 
''We welcome the decision to allow specified bodies to act on behalf of consumers who have suffered harm as a result of anti-competitive behaviour . . . Our only disappointment is that the Government did not take the opportunity to introduce legislation to allow representative actions on behalf of consumers who have been harmed by rogue traders. It appears anomalous that consumers can be assisted with redress against price fixers but not against a trader who has misled them.''
 The second part of that quotation is perhaps more a debate for another day, but it points out the pressure that the procedure will bring. Once it is established in this context, how long will it take before there is intense pressure on the Government of the day to extend the measure more widely? We would then be firmly into the world of regular class actions. Some Members might wonder what is wrong with that. The answer in principle is nothing much, as long as we go into it with open eyes and know the effect that it will have on our existing legal remedies and system. We must understand how that will work in practice, and how claims will be approached and damages calculated and allocated. It is useful to have a stand part debate on such an important clause. I hope that other hon. Members agree.

Vincent Cable: I wholly agree with the hon. Member for Eastbourne that we need to have a wide-ranging discussion about the introduction of an important principle. Like him, I was struck by the strength of language and feeling in the CBI submission. I do not routinely disregard what the CBI says, as much of it is sensible. Indeed, I happen to agree with a lot of what it said this morning about the revenue-raising part of the Budget. However, I find it difficult to understand why it has been so wound up. I want to comment on the hon. Gentleman's contribution, too. He spoke moderately and raised the right questions, but came to conclusions that were, if not necessarily wrong, different from mine.
 We must recognise the importance of consumer advocacy as a principle to be enshrined in the law. It is a fact of life that the people who are most likely to be exploited as consumers, because they are old, ill, infirm, poorly educated or lacking in literacy skills—sadly true of many adults—are those who are least able to pursue an action on their own. That is why we need advocates and one of the important reasons why the consumer movement exists.

Mark Field: I appreciate where the hon. Gentleman is coming from, but does he not appreciate that while consumer groups exist as advocates, under the terms of the clauses that we have already discussed, the idea is that it is the OFT that should take cases further forward? The great concern, which was espoused by my hon. Friend the Member for Eastbourne, is that we may find ourselves with super consumer groups, undoubtedly with strong media links, that effectively work as judge and jury, rather than by putting their evidence forward to the OFT.

Vincent Cable: That is a good question. The hon. Gentleman asked why consumer groups should not stop at simply being advocates and leave cases to the OFT, and there are certain reasons why it would be inadequate to leave things as they are. One is the problem of litigation, about which the hon. Member for Eastbourne made some helpful comments. It is extremely difficult—the present Government have a lot to answer for in this regard—for people of modest means in vulnerable circumstances to get legal help. Under the capital rules of the Lord Chancellor, there is probably not one single owner-occupier in my constituency who would be able to achieve legal aid, because of the nature of property prices. The only way that such people could possibly get legal help is by visiting an advocacy group such as the citizens advice bureaux or the Consumers Association, which have in-house lawyers who can take cases up on their behalf.
 The work involves going beyond the advocacy stage to working alongside lawyers, so the question is why the Consumers Association should not stop at only preparing a brief and then handing it to the OFT. The answer has probably to do with scale. The OFT is a national body. It will be a kind of quango, presumably sitting in London. I suspect that many issues that consumers and consumer groups want to pursue will be local and of a small scale. There may be an answer to that problem, but I suspect that there is a gap in the scale on which people might wish to pursue actions. Consumer organisations are probably much better at bringing both difficult test cases and small cases.

Jonathan Djanogly: That is exactly the point. The scale will be different. We are talking not about super complaints or small consumer-related issues, but about article 81 and 82 prohibitions. Is it not the case that individuals will simply be used for other people's purposes?

Vincent Cable: That may be the case, which is why I shall raise two useful points that I picked up from the hon. Member for Eastbourne. First, there is an anomaly, whereby the powers appear to exist for big complaints, but not for rogue traders. Perhaps we can eliminate that as we go through the Bill.
 The second consideration, which lies behind the question from the hon. Member for Huntingdon, is the motivation of the people who bring the action. We have referred to that issue several times in the discussion on the amendments and in this debate. How do we differentiate between disinterested bodies such as the citizens advice bureaux and the Consumers Association, and opportunistic lawyers who pursue 
 no-win, no-fee cases? I genuinely do not know how that distinction will be made after the Bill is enacted and how there will be a disciplined procedure for identifying those consumer associations that will quite properly bring actions on behalf of our constituents, as compared with those whose motivation is wholly different and less disinterested. 
 My final and major point is that lying behind the CBI's concern is a view of the world that I do not recognise. The picture is of poor big business cowering in the face of all the consumer pressure groups. However, that does not tie in with reality. In many markets, the balance of power is very different. I shall give one example, which relates to the intervention by the hon. Member for Wolverhampton, North-East. Many hon. Members, probably including some in this Room, and many clever people in the legal profession have been victims of mis-selling by Equitable Life. Indeed, in some cases, the most sophisticated people in the community have been victims of the abuse of mis-selling. 
 The balance of power in the relationship between consumer and producer is very often in the hands of the producer when it comes to sophisticated products with a lot of small print attached to them. However, the balance of the argument must be shifted in favour of consumer protection, which is why my instinct is to support the clause as it is.

Mark Field: Following the earlier comments by my hon. Friend the Member for Eastbourne, I am glad to be joining the all-party group on film. He has made many of the points that Opposition Members wished to make. We are concerned about aspects of the clause and we are interested to hear what the Under-Secretary has to say.
 I am sceptical about the power of many large lobby groups. My great concern is that consumer groups will turn from advocate groups and a voice for those with very little voice, as the hon. Member for Twickenham said, into part and parcel of the legislative process and little more than prosecuting authorities. We should not be naïve about the way forward. It is with great regret that one considers many other areas of public life. We need only look across the Atlantic at the trends there 20 years ago to discern how they will develop here. Class actions are a retrograde step. We should look at all the television advertisements for Claims Direct and other organisations telling people that if there is someone to blame, they have a claim. We will see a rapid unwinding of ethics in many ways if class actions come into play. 
 I am concerned that these designated consumer bodies will have great power. One recalls the phrase that Baldwin took from Kipling about power without any responsibility. Clearly there will be great media opportunities. Class actions have gone into a high-profile media arena. It is all too easy to see how the media can be whipped up into something of frenzy, particularly over certain campaigns, such as those where a little granny has had some difficulty. The consumer groups will no doubt get their public relations departments to do their best to ensure that their claims are seen in that light. We are being naïve. As my hon. Friend the Member for Eastbourne rightly 
 said, we must go into this with our eyes open as to what the medium-term consequences may be.

Jonathan Djanogly: The clause is ill conceived and I do not see the point of it. If the loss is so small that the action is not worthwhile, it is a matter for Government to decide whether, taking the infringements as a whole, it would be in the public interest for a claim to go ahead. Many hon. Members have talked about this matter as though we were talking about consumer-type actions. We are not. We are talking about competition-type actions, where sophistication on the part of consumers cannot be assumed. We are heading to a point where individuals' names will be used for little gain for themselves; they will merely suffer disturbance.
 That will not earn the Government a reputation as the godfathers of ambulance chasers in the country; that will come from the super complaints clauses. We will be setting up a platform for consumer bodies to flex their muscles on the basis of what they consider to be the overall harm and the public interest. I am not convinced that they are the right institutions to decide what represents the public interest. That is a matter for the Government.

Alistair Carmichael: The consumer bodies can certainly flex their muscles in that way, but they will succeed only if they have a case that the tribunal says has merits. There are two alternatives to class actions. Which is preferable; that people who have a claim do not pursue it or that we have individual actions pursued singly?

Jonathan Djanogly: Individuals can join together in a claim in the courts. That is a separate issue.

Nigel Waterson: Has my hon. Friend considered a third option? Personal injury lawyers in America say that few of their cases ever get to court. They make their money by settling cases out of court and taking their 40 per cent. or 60 per cent. It is in the interest of big business to settle claims, whatever their merits, simply because of the non-recoverability of the costs. But that is another matter. My hon. Friend should consider the possibility of that becoming a practice in this country too.

Jonathan Djanogly: My hon. Friend is absolutely right. We shall increasingly see consumer lobbies themselves lobbied by lobbying organisations, which will create a whole new industry. Questions will have to be asked about who funds it all. It will come back to businesses; possibly even competitors of the business against which the claims were initially brought. If we are not careful, such circularity might work against competition.

Melanie Johnson: On a point of information, Mr. Conway. A letter being circulated to you, to Mr. Beard and to all members of the Committee is now available on the Table. It explains an amendment to part 8 and a consequential amendment and it also provides the lists requested earlier about domestic and community infringements under clause 203. The information is available in good time for future debate.
 To return to matters in hand, I was asked why we were going down this particular route. I hope that I have already explained it to some extent, but I highlight what the hon. Member for Twickenham said about the importance of advocacy generally and its successful use on behalf of consumers. 
 The actions in the clause are not exactly the same as US class actions. One of the important differences is that class actions are allowed in the US on behalf of an amorphous and unnamed group of individuals, but consumer claims for damages will be allowed here only on behalf of named, identified consumers—a significant difference—and only with their consent. US class actions are brought in the ordinary courts, but here they will be brought before the CAT only following a decision of the OFT or the European Commission that established a breach of competition law. 
 These are clearly targeted measures, which exist to help the victims of anti-competitive behaviour. As several hon. Members have explained, it can be difficult for victims to bring effective damages action themselves, so we have every reason to put the new measure in place. It will strengthen the hand of consumers who have been damaged in the ways described. 
 In response to Conservative Members' other comments, I am as puzzled as the hon. Member for Twickenham about the strength of the CBI's feelings. Its concerns are greatly overstated. Damages will be calculated in line with principles used in the courts. The competition and related expertise of members of the CAT will enable them to assess damage caused by anti-competitive activity much more effectively than other courts. Nine members already have significant legal experience and the chairman has already presided over courts at high level. The Bill allows the appointment of members with competition or any other relevant legal expertise, so we expect the tribunals to be appropriately provided for in expertise terms. However, the basis of decisions about the appropriate level of damages will not fall outside the principles used in other courts. 
 In the light of what I have said about the designation process and my further reassurance that claims cannot be brought by bodies engaged in ambulance chasing or other vexatious activity, but only at the end of process through which damage to consumers will have been confirmed, I hope that Opposition Members will understand why the clause should stand part of the Bill. 
 Question put and agreed to. 
 Clause 17 ordered to stand part of the Bill.

Clause 18 - Findings of infringements

Nigel Waterson: I beg to move amendment No. 60, in page 9, leave out line 33.

Derek Conway: With this it will be convenient to take amendment No. 61, in page 9, leave out line 34.

Nigel Waterson: As a result of the European Commission's plans to decentralise enforcement of the EU competition rules, the OFT will be entitled to apply articles 81(1) and 82 of the treaty. As a matter of law—I am open to correction by the Minister—that is not currently the case. A similar argument follows for amendment No. 61. The OFT is not currently allowed to apply article 82. That may change in future, but it seems previous to change the position in the clause.

Melanie Johnson: The amendments seek to prevent decisions relating to breaches of articles 81(1) and 82 of the EU treaty from being binding on the courts for the purpose of damages claims. However, decisions relating to breaches of the chapter 1 and chapter 2 prohibitions of the Competition Act 1998 would remain binding for the purposes of such claims. The OFT has powers to apply articles 81 and 82 in some areas—for example, aviation and maritime transport—under the EC Competition Law (Articles 84 and 85) Enforcement Regulations 2001.
 The amendments would create an unbalanced system in relation to damages claims, whereby some findings of infringements are binding but others are not. The streamlined court procedure created by the clause would not be available to consumers harmed by anti-competitive behaviour where the decision establishing the breach had been taken under EC competition law. That could increase the costs of such consumers bringing a claim for damages compared with the costs of those bringing a similar claim in respect of a breach of UK competition law. Two sets of consumers harmed by similar illegal activity would therefore be subject to different procedures in the courts—one more lengthy and hence more costly than the other. I am sure that that is not what the hon. Member for Eastbourne wants and it is not the fair and transparent system that we would all want. Whatever the thinking of the hon. Member for Eastbourne on the amendments, I hope that I have persuaded him that they should be withdrawn.

Nigel Waterson: I am happy to accept what the Minister says. I will have another look at the matter, but at the moment I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Jonathan Djanogly: I beg to move amendment No. 62, in page 10, line 20, at end insert—
'( ) In section 46(3) of the 1998 Act, there is inserted after (h)—
''(i) to issue a notice under section 26 requiring the production of specified documents or information,
(j) to investigate premises without a warrant under section 27,
(k) to investigate premises with a warrant under section 28,
(l) not to investigate a complaint under Chapter I or II,
(m) not to grant interim measures under section 35.''.'.
 Our discussions on the amendments this afternoon have related to the role of the Competition Appeal Tribunal. This amendment also does so, as was suggested by the joint working party of the Bar and the Law Society on competition law. The proposal is that the issues that could involve appeals to the CAT should be increased to include those listed in the 
 amendment. The items are individually contained in other pieces of legislation and, the Committee will be glad to hear, I do not propose to go through them. However, hon. Members should note that in none of them is currently possible to appeal to what is currently the Competition Commission appeal tribunal—it will become the CAT—and each has a significant impact on the party concerned and can be challenged only by way of judicial review. 
 The Government seem to be working from the position that competition matters should be dealt with by institutions that are used to dealing with them. Indeed, that is the purpose of the CAT. Therefore, I commend the amendment, with the intention that the listed decisions should go to the CAT rather than the courts.

Melanie Johnson: As the hon. Gentleman said, the amendment would add to the list of decisions by the OFT that could involve appeal to the Competition Appeal Tribunal under the Competition Act 1998. Section 46 of that Act lists a number of decisions taken by the OFT that can be the subject of a full appeal to the tribunal. Further decisions of the OFT may be added by order under section 46(3) and, in the case of third-party appeals, under section 47(1). With one exception, we do not propose to add any new category of appealable decision, and I shall explain why.
 The exception is the category covered by paragraph (m) of the amendment, which the amendment would add to section 46(3). I agree that decisions not to grant interim measures should be appealable. We stated our intention to implement that change in the July White Paper, and I am happy to confirm that we will introduce the relevant secondary legislation as soon as is practicable. However, it is unnecessary to make the addition in the Bill. 
 I am not minded to take action on the other proposals in the amendment. The list of appealable decisions in section 46(3) consists of substantive decisions by the OFT, requiring an analysis of the merits of the case and, with only one exception, taken at the conclusion of a procedure or investigation. The sole exception is the current right to appeal against interim measures taken under section 35, which as I said we are prepared to extend by order to include decisions not to grant interim measures. It is neither appropriate nor necessary to provide for a full right of appeal on any intermediate, investigatory step in the OFT's proceedings, and the other four categories include issues that are still in mid-process. I remind the Committee that parties are not without an avenue of judicial redress in any of the circumstances stipulated in the amendment. The option of applying for judicial review in the High Court will always be available, and in that case the court will have full powers to impose remedies such as injunctions. 
 With that explanation of the element that we are picking up in the amendment and the reasons why we do not want to pick up the other listed items, I hope that the hon. Gentleman will feel able to withdraw his amendment.

Jonathan Djanogly: I thank the Under-Secretary for that explanation, although I am not much wiser about why
 the listed examples will not be included at this stage. She mentioned that judicial review is possible, but I thought that the idea was to move towards a speedier and more cost-effective way of appealing decisions. I do not understand why those issues cannot be included for the CAT to review.

Melanie Johnson: My understanding is that there is a difference in the four items. There is no completed process, so no decision is taken, as such. The point made under proposed paragraph (m) warrants being regarded as in a different category, which is why I make the distinction. Hon. Members may rest assured that we intend to take up that point and we shall add it to the list.

Jonathan Djanogly: I am still not sure why the Government do not want the CAT to act in relation to interim issues, but I hear what the Minister says. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 18 ordered to stand part of the Bill.

Clause 179 - Cartel offence

Vincent Cable: I beg to move amendment No. 77, in page 130, line 28, leave out 'dishonestly' and insert 'knowingly or recklessly'.
 There is a substantial break in the proceedings, as we jump forward in the Bill to a later clause. This may be one clause on which it would be appropriate to have an extended stand part discussion. The clause introduces, for the first time, the principles of the criminalisation of cartels and prison sentences, which clearly needs extended discussion. 
 My amendment relates to a technical drafting point. I am not a lawyer, as was painfully apparent from one of my interventions yesterday, but I am advised that the terminology—specifically, the use of the word ''dishonesty''—could be improved on. 
 There are two points on which the Minister may be able to advise me. First, in comparable offences, the phrase ''knowingly or recklessly'' would normally be employed. It is not clear why the word ''dishonestly'' applies in this case. The second point is a matter of common sense, rather than a legal point. It is possible to envisage circumstances in which a group of people collude to create a criminal cartel whose motives may not be dishonest at all. People might want to subscribe to a cartel arrangement for many reasons: from weakness of character, because they are acting under pressure from a superior in their company, or from personal ambition disconnected from personal dishonesty. Many motives are possible, so the conventional phrase ''knowingly or recklessly'' better captures the spirit of what the Government are trying to achieve. 
 I hope to be persuaded that there are good reasons for using the word ''dishonesty'' in this context. If the amendment were accepted, consequential changes would need to be made, including to some of the other amendments to which I put my name. This is a 
 probing amendment related to the use of legal language.

Alistair Carmichael: I associate myself with the words of my hon. Friend the Member for Twickenham. He does himself a disservice by saying that this is a minor and technical amendment, as it is a significant one in the context of a cartel offence.
 On reading the clause, it seems to me that politicians won the battle against the lawyers on this occasion. As a lawyer turned politician, I am familiar with that dichotomy. A great deal of political force lies behind the idea of having to show dishonesty, whereas, as my hon. Friend said, the more regular or expected terminology would be something like ''knowingly or recklessly''. 
 Does the terminology really matter? I suggest that it does. Lawyers will enforce, judge and interpret the provision, and if one looks at it from a lawyer's perspective, one sees that there will be problems with proving dishonesty. Such a charge brings with it the need to establish a much more complex mens rea, or a guilty frame of mind. 
 If I were defending a client, I would say that it was not enough simply to show that he knew what he was doing and that the prosecution had to prove that he was acting dishonestly. I would say that it was possible to know something without there being dishonest intent. It is therefore possible to argue that the mischief at which we are striking will not be rectified. 
 As the provision stands, there will be problems with enforcement. As I said on Second Reading, the success or otherwise of the offence will be assessed according to the number of successful prosecutions. However, the Government risk weakening the offence by insisting on dishonesty. The phrase ''knowingly or recklessly'' is much more in line with other offences, and I commend it to the Minister for further consideration.

Mark Field: Unless the Minister has other plans, I find myself in the unusual situation of being on the Government's side. I strongly feel that reference should be made to a dishonest frame of mind. I would be very reluctant for the clause and other provisions in effect to criminalise individuals simply on the basis of reckless behaviour. That would be a dangerous step for the criminal law to take.
 I shall no doubt speak at length about one or two of the other clauses that relate to this matter, because I have concerns about the idea of prison sentences and criminalisation. We at least need proof of dishonest intent, and recklessness is far too lax a term. I appreciate the comments made by both Liberal Democrat Members about the usual terminology, but such terminology often applies to civil, not fully fledged criminal offences. I therefore sincerely hope that the Minister will resist the amendment.

Ken Purchase: I want to probe the matter a little further. Historically, there is no question but that cartels have acted against the interests of ordinary consumers. It is therefore important that get the law right, and it is right and proper to probe the matter.
 I am not sure how to distinguish between dishonesty and the phrase ''knowingly and recklessly'', as applied to the conditions in (a) to (f). Are they the same? If so, there is no point substituting the phrase ''knowingly or recklessly''.

Alistair Carmichael: I fear that we are in danger of counting angels dancing on the head of a pin. However, I suggest that if one can prove (a) to (f), one has something pretty close to dishonesty, although not necessarily. In those circumstances, the phrase ''knowingly or recklessly'' would be preferable.

Ken Purchase: I am happy to seek advice from any quarter on this matter, because I think that we are dancing on the head of a pin. I am entirely unsure about the difference between the terms, and I am anxious that we get the terminology right. Clearly, (a) to (f) provide the grounds on which action will follow, but to make that reality, we must show people's intention. You used the word ''recklessly'', which could mean unintentionally. Do we need to prove that reckless behaviour has contributed to dishonesty? If that is the case, we really need an explanation from the Under-Secretary.

Alistair Carmichael: If you are able to prove (a) to (f), why is it necessary to prove that it was done dishonestly? The issue of dishonesty is an extra burden on the prosecutor.

Derek Conway: Order. Before the hon. Gentleman replies, I should say that this afternoon the Committee seems to be slipping into terminology that is not consistent with procedure in the House. The hon. Gentleman may think that he is inviting Mr. Purchase to respond to something, but by using the word ''you'', he is inviting me to do so. I, of course, do not comment on the merits of the Bill.

Ken Purchase: I do not want to push this much further. I am anxious to hear what my hon. Friend the Under-Secretary has to say. It is important for the Committee to understand whether, if there is a substantial difference between the two terms, we can adopt one or both or leave the measure unamended and be happy that, in terms of paragraphs (a) to (f), proving dishonesty is no more difficult than proving that an act was done knowingly or recklessly.

Melanie Johnson: First, the effect of the amendment—I hope that hon. Members are all aware of this—would be to widen the scope of the offence considerably. The Bill provides for a definition based on dishonesty in order to create a tightly defined offence. We think that that is important. Although there is no legal requirement for an exact correspondence between the new criminal offence and EC or domestic competition law, we would like there to be consistency. The dishonesty test is designed to achieve both these objectives; a tightly drawn offence and consistency.
 Bona fide activity, or activity which would be exemptible under existing EC or domestic competition law, should not be caught in practice. This will be achieved first because the OFT will not prosecute a case where there is any real possibility that the agreement between the undertakings would be compatible with Community or domestic competition law; and secondly, because for a conviction, the court 
 must be convinced beyond reasonable doubt that the defendant acted dishonestly. 
 The sort of evidence that would point to dishonesty is likely to include a failure to seek legal advice, combined with attempts to disguise or hide activity. For example, holding secret meetings and the absence or destruction of records, and other such practices, would be instances of such evidence. 
 Dishonesty would be proved according to the well-established Ghosh test, which requires the jury to consider two questions. First, was what was done dishonest by the standards of reasonable people? Secondly, did the defendant realise that this was the view of reasonable people? The conduct is only dishonest if the answer to both questions is yes. In a criminal trial the answer must be yes beyond any reasonable doubt for dishonesty to be proved. 
 That means that the defendant must have believed his or her conduct to be wrongful in nature, in the sense of realising that reasonable people would regard it as such. For example, a defendant whose company had an exemption from the commission, or legal advice stating that the agreement would be exempt, could hardly be regarded as dishonest in concluding such an agreement. In other areas of the law juries have shown themselves to be well capable of identifying dishonesty using the test. 
 An offence based on knowing or reckless conduct, as is proposed by the amendment, would not be focused in this way. It would cover a much wider range of anti-competitive activity than the Government intend.

Alistair Carmichael: I take the Under-Secretary's point but I wonder whether she overstates the case, because the measure would remain in the context of the agreements referred to in subsection (2). The offence would remain tightly focused.

Melanie Johnson: Notwithstanding the hon. Gentleman's point, we believe that the amendment would, for example, criminalise individuals who simply entered into a price-fixing agreement whether or not that agreement was already exempted, for example under EC law, and was therefore obviously a lawful agreement, and whether or not they have done so dishonestly, in the way I have described. It would also, for example, criminalise a business person entering an agreement on the basis of clear legal advice that it would be exempt under EC law.
 We believe that a tightly drawn offence based on dishonesty is the appropriate definition for the new criminal offence. I think that that establishes the right focus on the wrongful nature of hard-core cartels. That is why we have selected the term ''dishonest'' in this context. I hope that I have explained to hon. Members, all of whom have contributed usefully to our discussion on the subject, why we have selected that word and that, in that light, the hon. Gentleman will withdraw his amendment.

Vincent Cable: Through the exchanges that we have had, I have realised that this subject is rather more important than I appreciated when I introduced it. We
 might want to refer to it again later or in another place. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nigel Waterson: I beg to move amendment No. 139, in page 130, line 31, at end insert—
''(1A) An individual is only guilty of an offence under subsection (1) if he dishonestly agrees with one or more other persons to make or implement or cause to be made or implemented agreements which fall within section 2 of the 1998 Act and do not meet the criteria in section 9 of the 1998 Act''.

Derek Conway: With this we may discuss the following amendments: No. 86 in page 130, line 32, leave out
''if operating as the parties to the agreement intend''.
 No. 87, in page 131, line 20, at end insert— 
''(8) It shall be a defence to the offence in section 179(1), if the arrangements in question: 
 (a) contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: 
 (b) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; 
 (c) do not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question''.

Nigel Waterson: Amendment No. 139 is designed to tie the offence for individuals to a substantive infringement of competition law in the 1998 Act. I take no kudos for drafting it; it was one of the amendments put forward by the joint committee of the Law Society and the Bar.
 The amendment seeks to avoid the problem that arises in the Bill that an individual could be convicted where the agreement in fact qualifies for exemption under section 9 of the 1998 Act. It is not sufficient, the joint committee says, to rely on the prosecution's discretion not to bring proceedings in such a case. The individual should not be at risk in that way. Moreover, the formula proposed in the amendment would prevent prosecutions being brought in cases in which the economic impact was insignificant. That is because in order to fall within section 2, the anti-competitive agreements must have what is called ''an appreciable effect'' on competition. 
 The Government have argued that linking the offence to the substantive competition infringement will result in economic arguments being adduced that juries will find difficult to consider. That is simply unrealistic. Economic arguments will be adduced by an individual in his defence from time to time to demonstrate that he was not acting dishonestly or that similar conduct had been approved by the OFT or the commission in other cases. The amendment seems a workmanlike attempt to protect potential defendants in such cases. 
 Amendment No. 86 would delete the words 
''if operating as the parties to the agreement intend''.
 It is sponsored by the CBI, which takes the view—I think it has a point—that if those words were not deleted, it would appear that the offence could in 
 theory be committed even where the relative arrangements provided for in the agreement could not in practice lead to any of the consequences referred to in paragraphs (a) to (f). Should the agreement have any of those consequences unintentionally, the parties, presumably, would not be acting dishonestly. 
 Amendment No. 87, which is rather longer, is justified on the basis that if the cartel offence was finally introduced, the Government should, at the very least, entitle individuals to the right to rely on the provisions in article 81(3) of the EU treaty. It is true that the prohibition in that article relates to undertakings rather than to individuals, but as a matter of fairness, the same defence should be afforded under the UK regime. While I accept that the dishonesty approach taken by the Government has its merits, there should also be a provision modelled on article 81(3). I commend the amendments to the Committee.

Melanie Johnson: The amendments would alter the definition of the offence in several ways; perhaps I can take them in turn. In responding to amendment No. 86, it might be helpful if I summarised the intended policy effect of the introductory words to the clause:
''The arrangements must be ones which, if operating as the parties to the agreement intend, would''—
 and so on. That wording reflects the policy intention to criminalise dishonest agreements between individuals and to do so independently of whether their agreement is actually implemented as they intend—or at all—by their respective companies. 
 Their intentions might not come to fruition. The companies might get wind of them and stamp on them. However, the individuals who reached the dishonest agreement would still have committed the criminal offence. That is right. The words that the amendment would remove clarify that policy intention. They do not provide for the criminalisation of agreements between individuals, if those agreements did not lead to their companies engaging in the types of activity described in paragraphs (a) to (f). 
 Amendment No. 87 would establish proof of the conditions for exemption in UK competition law as a statutory defence to the offence. The definition of the offence requires the prosecution to show that the agreement has been entered into dishonestly. That is likely to involve evidence of a failure to seek legal advice combined with attempts to disguise or hide activity, such as holding secret meetings and the absence or destruction of records. 
 In other words, the dishonesty approach is intended precisely to ensure that in practice bona fide business arrangements, which would be exempt under existing competition law, should be criminalised. Even within this definition, the prosecutors will wish to focus on the most serious cases where the dishonest intent of the parties is not in doubt. 
 Amendment No. 139 covers much of the same ground. It would provide directly that the offence would apply only to individuals who reached an agreement that would fall within chapter 1 of the 
 Competition Act 1998 and would not be subject to an individual or block exemption. The amendment would not introduce a statutory defence, but many of the points that I have already made apply here, too. The Bill provides for a definition based on dishonesty and thus creates a tightly defined offence. The proposed amendment would add a further test, namely that the underlying agreement should be anti-competitive under existing competition law. In practice, I would expect any agreement that was ''dishonest'' to fall within that category anyway. 
 Certainly, the Serious Fraud Office would not prosecute if the agreement were not contrary to competition law. However, there is a fundamental problem with establishing linkage to existing competition law. We have of course considered the approach of a definition based on a direct link to article 81 of the EC Treaty, or on chapter 1 of the 1998 Act, which comes to the same thing for these purposes. That option was set out in last year's White Paper alongside the dishonesty option. It is superficially attractive, but would present major problems. The prosecution would need to prove beyond reasonable doubt, in every case, that the agreement would constitute a breach of EC or UK competition law to the satisfaction of a lay jury. I do not think that it is a trivial matter. I hope that the hon. Member for Eastbourne was not trivialising the difficulties in his remarks. It would inevitably draw in complex legal and economic argument that is not appropriate for a jury trial. The dishonesty approach avoids the need for the prosecution—

Nigel Waterson: I appreciate the Under-Secretary's point about complexity, particularly with jury trials. However, we are talking about offences for which people can go to prison for five years, in theory. That issue will be canvassed at great length in the stand part debate. Surely it is correct that, where there are appropriate safeguards and defences that we can make available to people in the structure of the Bill, we should seek to do so. This is a good example, is it not?

Melanie Johnson: The dishonesty approach does avoid the need to prove the breach of EC law up front, but the defence can still argue that the agreement was exempt. That is an important fact to bear in mind about the way in which the provision is taken forward.

Nigel Waterson: That is precisely the point that I was making. As I understand it, if things are left as they are, the onus will be on the defence. Whereas the ''golden thread'', as it was once described, which runs throughout the English legal system is that the onus is on the prosecution in such cases, and it certainly should be, particularly when criminal sanctions are being imposed.

Melanie Johnson: Otherwise, if there were a direct link to EU law, which I think is what the hon. Gentleman is suggesting, the prosecution would be required to prove a breach of EU law in every case. He will understand that that would entail a lot of complex argument about economic competition of a sort that would make prosecution extremely difficult.

Jonathan Djanogly: I cannot foresee any circumstances in which prosecution would not be extremely
 complicated, which is what we shall argue on clause stand part. The point is whether someone should go to prison for a cartel offence. Surely, the matter should be beyond reasonable doubt.

Melanie Johnson: The dishonesty approach avoids the need for the prosecution to prove up front that there has been a breach of UK or EU competition law. The Commission has told us informally that it favours the dishonesty approach. Of course, there will be complex arguments, but the issue is the degree of complexity. A tightly defined offence based on dishonesty is appropriate for the new criminal offence. That will focus the attention of courts, juries and the wider public on the wrongful nature of hard-core cartels—that is, dishonesty.
 I hope that I have persuaded hon. Gentlemen that, even if he should want to reflect further on the matter, the amendment should be withdrawn. If not, I regret that I shall have to ask the Committee to oppose it.

Alistair Carmichael: Had I been sharper off the mark, I would have intervened on the Under-Secretary.
 The point that I want her to consider relates to a comment that she made about subsection (2), which states: 
''if operating as the parties to the agreement intend''.
 She seemed to be telling the Committee that once the agreement has been made, it does not have to be implemented. Has she—or her advisers—considered whether that is easily caught by the existing general criminal law of an attempted offence, which, clearly, would have been committed at that stage? The draftsmen may merely be reinventing the wheel.

Melanie Johnson: I need to seek advice on that. If I may, I shall write to the hon. Gentleman and circulate my letter to other Committee members.
 On the hon. Gentleman's original question, I can confirm that he is right in his understanding of what I said: the agreement does not need to have been implemented to be caught. The making of the agreement is the offence. That is what matters, not whether it was implemented and that is what I said earlier.

Nigel Waterson: I am grateful for the Under-Secretary's explanation. It will be painfully apparent that I have not been wholly convinced, but on the basis that she and her advisers will consider the matter further and that we may return to it later, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nigel Waterson: I beg to move amendment No. 88, in page 131, line 20, at end insert—
'(9) This section shall not enter into force until three years after the entry into force of the European Commission's reforms of Community competition law'.
 The amendment would add an additional subsection to the clause reflecting the concerns of many people about a possible divergence between the regime in this country and in Europe. The Under-Secretary will be aware that business organisations such as the CBI are concerned that while EU modernisation reforms are going ahead apace, it is 
 slightly eccentric of this country to be ploughing its own furrow, not only so soon after the previous legislation, but when we are expecting EU reforms and a new European system. It would be sensible to allow that system to be introduced and bedded down and to see how it works in practice before we move ahead.

Melanie Johnson: Is the hon. Gentleman suggesting that we should always wait to implement measures until the EU has done so?

Nigel Waterson: No, quite the opposite. It just seems to make enormous sense, particularly if we are trying to look after the interests of British business. If people have to adjust to diverging regimes, it would be an enormous burden on business, an extra cost and not very sensible. I do not think that I have ever been accused of being excessively communautaire, but it seems completely barmy to have two diverging systems affecting British companies or foreign companies operating in this country; hence, the timing in the amendment.
 As we know, the Commission has plans to reform the situation. It is planning to share enforcement of the rules with the national competition authorities and the courts of each member state, and it hopes to ensure consistent application of the law by establishing a network between itself and the national competition authorities for the passing of information. We will deal with the passing of information in considerably more detail on the stand part debate.

Ken Purchase: The question of running two regimes is important. However, from the wording of the amendment, it seems that, if we should make such a law, it would control those relationships. Unless the hon. Gentleman believes that there could be an appeal based on a not yet implemented European law, why should we not offer this degree of protection, such as it is, earlier than our European counterparts and for once drive the train rather than be a passenger?

Nigel Waterson: The hon. Gentleman's intervention is important and highly intelligent, as one would expect, but what is the point of moving in this direction if the rest of Europe, or the European regime, is moving in a different direction? We will come to this in much more detail when we discuss criminalisation.
 An argument is that we are following what already happens in Europe by bringing in criminal sanctions. It is true that Austria and Ireland have anti-trust regimes that are part criminal, yet criminal sanctions have hardly ever been used in either jurisdiction. I am 
 told that in the first five years of the Irish competition Acts being in force, there was only one conviction, which I believe resulted in a fine of 1,500 punts—a princely sum. Presumably, the amount would be in euros now. The criminal sanctions in the French commercial code are rarely used, and the offence of bid rigging in Germany is seen principally as an anti-corruption not a cartel law. 
 There are also questions about whistleblowers, the seriousness of penalties as between large and small companies and as between the European and the domestic regimes. Again, I do not want to develop them now and have to repeat myself on stand part.

Jonathan Djanogly: The three-year period is relevant to European law, as my hon. Friend said, but also to the length of time since the Competition Act 1998 was introduced. The penalties imposed in that legislation have not yet been tested, and we do not know how well they will work. It would be better to have a three-year period to test the existing penalties before we rush ahead and introduce new ones.

Nigel Waterson: My hon. Friend makes a telling point. As I recall, we have an amendment further down the batting order that says that some of the Bill's provisions should not come into effect until 1 March 2005, exactly five years after the 1998 Act came into force on 1 March 2000. Most of industry and certainly the CBI are completely bemused as to why the Government are rushing to re-open some of the issues when they thought that they had been settled, at least for the time being, in the 1998 Act.
 Whatever the issue—cartels, labelling, food standards or anything else—we owe it to businesses to give them some certainty over a reasonable period, so that they do not have constantly to update themselves, while trying to run their businesses on shifting sands.

Ken Purchase: Britain has been ahead of the game on competition law. Recently, we have been the equal of Germany on such law; many other European countries have not, particularly the Italians. It is of no surprise that the Europeans will need more time to implement this protection than we do. It is time for us to take the lead.
 It being Five o'clock, The Chairman adjourned the Committee without Question put, pursuant to Order of the Committee [16 April ]. 
 Adjourned till Tuesday 23 April at half-past Ten o'clock.